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Citigroup’s profits fell by more than a third in the most recent quarter, driven by weaker corporate spending, a lack of business and a costly wave of layoffs.
The New York-based bank reported net income of $2.9 billion, compared to $4.5 billion for the same period last year. Revenue fell 1 percent to $19.4 billion in a quarter marked by mounting fears of a US recession.
Revenue at Citi’s large cash management and payment processing unit, which caters to businesses, grew just 15 percent, less than half the 32 percent growth in the same period last year.
Like its peers, Citi was not immune to the sharp slowdown in business deals. Revenue from corporate and investment banking fell 44 percent in the quarter, while fees from market operations — trading stocks and bonds on behalf of clients — fell 13 percent.
Weakness in several of its businesses prompted the bank to announce plans to cut up to 5,000 staff last month. During the quarter, Citi’s expenses increased by more than $1 billion, largely due to the layoffs.
“Amid a challenging macro environment, we have continued to see the benefits of our diversified business model and strong balance sheet,” said Citi CEO Jane Fraser on Friday. “In banking, the long-awaited recovery in investment banking has yet to materialize, resulting in a disappointing quarter.”
However, a still-resilient US consumer proved to be a bright spot for Citi. Revenue from Citi’s personal credit card business rose 27 percent during that period, helping the bank’s overall profits beat Wall Street expectations.
As the Federal Reserve signals its determination to keep raising interest rates to bring down inflation, Citi expects more loans to fail. Loan loss provisions rose nearly 40 percent to $1.8 billion in the quarter. Total lending in the quarter was little year-over-year.
Deposits were almost unchanged compared to the previous quarter. Analysts had warned that banks, even the big ones, could see deposit outflows this quarter as consumers seek higher-yielding assets.
A decade and a half after the financial crisis, Citi is still struggling to get back on its feet. Fraser, who took over in 2021, has led the bank through a reorganization, pulling Citi out of underperforming businesses and closing branch networks around the world to cut costs.